Parallels Between Cannabis and Cryptocurrency Market Says the SEC

In an announcement made by Tilray (TLRY), a global leader in medical cannabis research, and distribution with the goal to legitimize the cannabis industry, that it will be partnering with pharmaceutical firms to further improve their services, in an attempt to become the world’s most trusted cannabis company. This reveal has lead to a jump of TLRY by 90% market growth within 24-hours.

This spike lead to the company’s market cap to even exceeded that of Tiffany, American Airlines, and Chipotle. However, the market cap didn’t over-take the other companies for long, as the shares fell back in a correction, still leaving it with a 40% gain in the day. The correction continued over the course of a few days. However, on October 2, 2018, the equity of Tilray took another 20% hit after PepsiCo Chief Financial Officer Hugh Johnston, stated that the company will not be investing in marijuana in the near future.

The CFO commented:

“I think the difficulties in investing in that category, particularly in the U.S., where federally these things are still not legal, are quite a considerable challenge. So we look at everything, but certainly no plans at this point to do anything.”

This volatility just showcases some of the parallels between cannabis stock and the cryptocurrency market. As stated both share high volatility, support from millenials, media influences and regulatory uncertainties. However, according to SEC Office of Investor Education and Advocacy’s Chief Counsel, Owen Donley III, the two industries share fraud and scammers as well.

Acoording to Investor.gov, the SEC’s website for individual investors, investors should be wary entering these markets:

“Scam artists often exploit “hot” industries to trick investors, including by making false promises of high returns with low risks. The SEC’s Office of Investor Education and Advocacy (OIEA) and Retail Strategy Task Force are warning investors about these kinds of investment schemes involving marijuana-related companies.”